Boston Scientific Corp., of Marlborough, Mass., agreed to acquire Claret Medical Inc., the developer of the Sentinel cerebral embolic protection system, for $220 million in up-front cash, as well as a potential reimbursement-based milestone payment of up to $50 million.
Sentinel is used to protect the brain during certain interventional procedures, predominately in patients undergoing transcatheter aortic valve replacement (TAVR). Claret is based in Santa Rosa, Calif., and has approximately 120 employees. The acquisition is projected to close during the third quarter.
"It was really an easy consideration for the organization to look at cerebral embolic protection, and within this context, Claret is [the] undisputed leader," Ian Meredith, executive VP and global CMO at Boston Scientific, told BioWorld MedTech. He added that the two companies had been in discussions for a couple of months, but "we've paid attention to the data and the field for quite some time, a couple of years."
Sentinel received the CE mark in 2014 and FDA clearance in 2017. (See BioWorld MedTech, June 6, 2017.) It is the only device cleared to protect patients against the risk of stroke during TAVR, a minimally invasive procedure to replace the aortic valve in patients with severe aortic stenosis.
During the FDA advisory committee meeting for the device, panel members had no formal vote regarding the de novo petition. However, they were reassured by the safety data, and advised the agency that the device ought to be available to interventional cardiologists. (See BioWorld MedTech, Feb. 27, 2017.) They voiced their support despite the company coming up short on a composite primary effectiveness endpoint.
Claret has done "a brilliant job marketing this [device] in [the] less than 12 months since FDA clearance, and they are in more than 100 U.S. centers currently," Meredith said, adding that Boston Scientific expects to see significant growth over the next year and beyond.
When asked about feedback related to the device, Meredith said it was favorable and helped inform Boston Scientific's decision. "As part of a diligence process, we ran fairly extensive voice-of-customer surveys, both in Europe and [the] U.S., and amongst users and non-users of the technology to gain their general thoughts about embolic protection, how they viewed the data from all of the technology in totality, and how they viewed the Claret Sentinel data specifically."
Uptick in traction
At least one analyst sees a bright spot with Sentinel. "Based on our recent physician checks, Sentinel is seeing increasing traction from TAVR implanters despite the added cost and pivotal U.S. trial missing the primary endpoint," wrote Larry Biegelsen of Wells Fargo Securities LLC. "Many physicians we spoke with at TVT (Transcatheter Valve Therapeutics) said they are using Sentinel in every patient because (1) stroke is such a devastating adverse event, (2) the device is safe, (3) patients are requesting it, and (4) a recent meta-analysis showed a 40 [percent] reduction in strokes when embolic protection was used."
These considerations also have been clear to Meredith. "Having worked in clinical practice, from a personal perspective, stroke was always a devastating and dehumanizing complication, and something people feared more than death," he told BioWorld MedTech. "In my 30 years in practice, I can't remember how many times patients had said when you told them of the risks and potential benefits of any interventional procedure, let alone TAVR, they'd say, 'well, doctor, I'm not afraid of dying. I've had a good life, but I am afraid of stroke.'"
Boston Scientific hopes to close the deal as quickly as possible. "There is a significant plan to integrate certain aspects," Meredith said, but he did not want to go into greater detail at this point.
For now, the company will look to establish the technology in the TAVR space, but it is looking more broadly in other left-heart procedures. Areas include mitral valve repair or replacement, high-risk cases of left atrial appendage closures, as well as high-risk cases of pulmonary vein isolation for atrial fibrillation (AF). These procedures are "associated with a fairly significant risk of asymptomatic cerebral events detected on cerebral imaging, and a small, but significant rate of clinically apparent stroke," Meredith said.
For his part, Biegelsen noted that there could be additional good news for both the device and Boston Scientific in general. "We believe a new tech add-on payment from CMS (decision expected in August) would greatly improve the uptake in the U.S." If that is approved, it could give sites incremental reimbursement for a TAVR procedure of up to 50 percent of Sentinel's cost, which stands at about $2,000-$2,500. "Lastly, we view today's news as another positive signal that BSX is to re-launch Lotus in 2019," according to his note. Lotus is a device that aims to address the TAVR market.
Also, Biegelsen said Boston Scientific is likely to bundle Sentinel with its TAVR valves. "We expect BSX to offer Sentinel at a higher price point for use with competitor TAVR devices," he wrote, but questioned whether such a strategy would "have a meaningful impact on TAVR market share dynamics."
Word of this buy comes two weeks after Boston Scientific reported an agreement to acquire the rest of Cryterion Medical Inc., of Carlsbad, Calif., it does not own for $202 million in up-front cash. (See BioWorld MedTech, July 6, 2018.) That company is developing a single-shot cryoablation platform for the treatment of AF.
At the Sanford C. Bernstein Strategic Decisions Conference May 31, Mike Mahoney, Boston Scientific's CEO, president and chair, noted that the company has conducted several tuck-in acquisitions this year, and more buys were on the horizon. "We . . . are approaching 35 companies in our VC portfolio . . . [a]nd as I've said previously, we expect to acquire a number of those companies over the next 24 months within that portfolio," Mahoney said.
Buys from this year include Nxthera Inc., a specialist in minimally invasive treatment of benign prostatic hyperplasia, for an upfront cash payment of $306 million, followed by as much as $100 million in possible milestone payments across the next four years. (See BioWorld MedTech, March 22, 2018.) Another target was Nvision Medical Corp. for $275 million, with up to $125 million in clinical and commercials milestone payments expected over four years. (See BioWorld MedTech, April 17, 2018.) Nvision makes an FDA-approved fallopian tube cell collection device.
Mitral valves from Santa Rosa, Calif.-based Millipede Medical Inc. caught Boston Scientific's eye, with the company inking a $90 million investment and an acquisition option agreement. (See BioWorld MedTech, Jan. 25, 2018.)
When asked about other potential deals, Meredith noted that the company's overall strategy is category leadership. To that end, the company will look at tuck-in or adjunctive deals that help patients, improve the quality of procedures, and lessen the burden on clinicians.